Working from home: the legalities

If you run your own business, working from home, there are legal ramifications which need to be considered.

There are few regulations that apply to 'normal' businesses that do not apply to 'home' businesses: you are not exempt just because you operate within your own home.

If you are considering setting up a business at home, make sure you are not breaching Local Authority regulations.

If it is simply a matter of converting a room into an office and importing some office furniture and computer equipment, this is unlikely to cause a problem. If, however, you will need to hold stock (especially if that stock is in any way dangerous or could pose a nuisance) there are likely to be difficulties in a residentially zoned area.

Visiting clients or customers can also be a source of difficulty, especially if parking is at a premium in your area. Keeping your neighbours happy is important when running any home business.

If you have a residential mortgage, setting up a business in the house may breach your mortgage terms.

Similarly, make sure you check your insurance cover. Most insurers will happily add business items to your normal household cover for an extra premium, but business assets are not normally covered in a household effects policy. Also check your buildings insurance to ensure the cover holds if you have a home business.

Almost any business will need to register under the Data Protection Act.

If you are planning to build an extension to your property for your business, there are tax implications to consider.

If you borrow to finance the extension, then the interest would normally qualify for tax relief. The downside to this is that by identifying part of your building as 'business premises' you could run into Capital Gains Tax problems later.

Also, if the business is VAT registered - which it must be if it exceeds the VAT threshold - then input tax on the construction and fitting out should be recoverable, at least in part.

If your business is run as a company, in law it will be a different legal person from the directors.

For example, if you are employees of a company, then as well as company secretarial matters, there may be Health and Safety legislation, employment law and PAYE regulations to consider.

There are exemptions for small businesses from some parts of legislation, but they are few. Don't take liberties with the law or tax officials. Also, don't forget that the company will need its own insurance for any items it owns.

In general, the input VAT on a supply made to a VAT registered business that is for business purposes is recoverable.

Likewise, provided an expense is for business purposes, it is normally allowable for income or corporation tax purposes. Normally the basis is that each 'mixed ' private and business expense is divided in proportion to the business versus private use and split accordingly. There are exceptions to this general rule of course!

If using a company, make sure that any receipt you get is in the company's name, not yours, or else there could be both VAT and National Insurance problems later.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. Neither BusinessesForSale.com nor Business Lawyers can accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

When Becky Birkin gave birth to her first child, she found she had time to pursue a new hobby.

Subscribe to our email updates

Sign up to receive the latest advice, most popular businesses, special offers and much more.

Email Address

First Name

Country

I'm interested in

BusinessesFranchises

ContactMeByFaxOnly

BusinessesForSale.com is committed to protecting your privacy. We will use the information you provide on this form to send you
marketing emails .
Find out more about what we do with your information in our Privacy Policy.

Marketing Emails:
You will receive newsletters, advice and offers about buying and selling businesses and franchises. We will also send you information about events relating to buying, selling or running a business.

BusinessesForSale.com is the world's most popular website for buying or selling a business.

Established in 1996, the website is an international marketplace of businesses for sale. We provide a cost-effective route to market for business owners and their representatives and a one stop shop for aspiring entrepreneurs and business buyers.